The court battle is deepening between Indiana-based Rushville-based Omnicity Corp. and a handful of owners whose companies it acquired.
Omnicity, a provider of wireless broadband services that moved its headquarters from Carmel to Rushville in 2009, has been sued by at least four of the owners, charging that it failed to fully pay them for the acquisitions. All told, the owners say they’re owed more than $1.2 million.
Omnicity, though, is fighting back and has brought counterclaims against two of the owners—the most recent filed in Rush Circuit Court on Wednesday and the other in Ohio in November.
“In both of these cases, we have not gotten what we purchased,” Omnicity CEO Greg Jarman said in a phone interview. “If you don’t get what you pay for, you have to stand up for yourselves.”
The latest countersuit stems from Omnicity’s purchase of the assets of Alexandria-based NDWave LLC in February 2009. Owner Steve Narducci sued Omnicity in September 2010 in Rush Circuit Court, claiming Omnicity owes him $405,911, plus interest, in addition to roughly $6,500 in wages and reimbursements.
Omnicity responded with a host of charges, alleging that Narducci breached his contract and fiduciary duty, committed fraud and conversion, and defamed Omnicity by telling certain companies that it was on the “verge of bankruptcy.”
Omnicity brought Narducci on as its vice president of field services in June 2008, before the acquisition was complete, but terminated his employment in August 2010, according to his complaint.
Narducci, who since has launched a competing company, refuted the charges.
“I figured [the countersuit] was coming, just because they’re mad at me because I had to find a way to make a living again,” he said in a phone interview. “What they’ve done is pretty wrong, and I’m not fearing it much.”
Omnicity’s other countersuit, filed in Ohio, charges that Kyle Yoder, former owner of Digital Network Solutions Inc. in Berlin, Ohio, breached his contract and non-compete clause, in addition to committing conversion.
Yoder agreed to sell the assets of his company to Omnicity in March 2010 for $750,000 in cash at closing. The deal also called for $500,000 to be paid in quarterly installments over four years, and Yoder was to receive $150,000 in company stock.
Omnicity gave him the $700,000, the complaint said, but it failed to pay the first installment of the $500,000 note, triggering a clause in the agreement that made the entire balance due immediately.
Yoder also alleges he is owed additional money, as well as severance, vacation pay and two paychecks after Omnicity fired him as general manager of its Berlin-based operation in July.
Omnicity, meanwhile, claims Yoder hurt Omnicity’s business by failing to pay vendors, refusing to provide Omnicity with terms and conditions of certain customer contracts and failing to secure new customers.
A month after he was fired, Yoder started a new business that triggered the non-compete agreement, Omnicity claims.
The conversion charge stems from allegations by Omnicity that Yoder took $25,000 he claimed was reimbursement for business expenses when in reality he used most of the money for a personal trip to Hawaii.
Yoder referred comment on the counterclaim to his lawyer, who did not return phone calls.
Omnicity faces a third suit, from Peru, Ind.-based North Central Communications Inc., which it also is likely to challenge, Jarman said.
“But the real focus we have are on these first two,” he said, “and we’ll be hitting them vigorously and defending ourselves.”
Meanwhile, a Rush Superior Court judge on Feb. 8 ordered Omnicity to pay $67,500 to the owners of Decatur-based USppp Inc., of which Omnicity purchased the assets in Dec. 2009. Jarman acknowledged the debt and said Omnicity intends to pay it.
Altogether, Omnicity has a working capital deficit of $4.1 million, according to its latest financial statement, filed in December. The company is severely behind in loan payments to a lender, the Muncie Industrial Revolving Loan Fund.
For its fiscal first quarter ended Oct. 31, the company reported a loss of $244,000 on revenue of $1.3 million, compared with a loss of $400,000 on revenue of $617,000 the same quarter of 2009.
Omnicity has about 12,000 broadband customers in Indiana and Ohio. The company went on an acquisition spree after going public in 2008.